Question
In: Accounting
Hershey Company is one of the world’s leading producers of chocolates, candies, and confections. The company...
Hershey Company is one of the world’s leading producers of chocolates, candies, and confections. The company sells chocolates and candies, mints and gums, baking ingredients, toppings, and beverages. Hershey’s consolidated balance sheets for 2009 and 2010 follow:
|
Hershey: Consolidated Balance Sheets |
|||
|
(millions) |
2009 |
2010 |
|
|
Assets |
|||
|
Current Assets |
|||
|
Cash and Equivalents |
$ 253.6 |
$ 884.6 |
|
|
Accounts Receivable, Trade |
410.4 |
390.1 |
|
|
Inventories |
519.7 |
533.6 |
|
|
Deferred Income Taxes |
39.9 |
55.8 |
|
|
Prepaid Expenses and Other Assets |
161.8 |
141.1 |
|
|
Total Current Assets |
1,385.4 |
2,005.2 |
|
|
Property, Plant, and Equipment, net |
1,404.8 |
1,437.7 |
|
|
Goodwill and Intangible Assets |
571.6 |
524.1 |
|
|
Other Intangible Assets |
125.5 |
123.1 |
|
|
Deferred Income Taxes and Other Assets |
187.7 |
182.6 |
|
|
Total Assets |
$ 3,675.0 |
$ 4,272.7 |
|
|
Liabilities and Shareholders’ Equity |
|||
|
Current Liabilities |
|||
|
Accounts Payable |
$ 287.9 |
$ 410.7 |
|
|
Accrued Liabilities and Taxes |
583.4 |
602.7 |
|
|
Short-Term Debt |
24.1 |
24.1 |
|
|
Current Portion of Long-Term Debt |
15.2 |
261.4 |
|
|
Total Current Liabilities |
910.6 |
1,298.9 |
|
|
Long-Term Debt |
1,502.7 |
1,541.8 |
|
|
Other Long-Term Liabilities |
501.4 |
494.4 |
|
|
Total Liabilities |
2,914.7 |
3,335.1 |
|
|
Shareholders’ Equity |
|||
|
Common Stock |
359.9 |
359.9 |
|
|
Additional Paid-In Capital |
394.7 |
434.9 |
|
|
Retained Earnings |
4,148.3 |
4,374.7 |
|
|
Treasury Stock |
(3,979.6) |
(4,052.1) |
|
|
Accumulated Other Comprehensive Loss |
(202.9) |
(215.1) |
|
|
Noncontrolling Interests |
39.9 |
35.3 |
|
|
Total Shareholders’ Equity |
760.3 |
937.6 |
|
|
Total Liabilities and Shareholders’ Equity |
$ 3,675.0 |
$ 4,272.7 |
|
Additional information for 2010: Total sales $5,671.0
Costs of goods sold $3,255.8
Net income $ 509.8
REQUIRED:
- Compute the common-size balance sheet for 2010 and the rate of change balance sheet for 2010.
- Compute the following ratios for 2010. Provide a brief
description of what each ratio reveals about Hershey.
- Return on common equity
- Debt-to-assets
- Debt-to equity
- Current
- Quick
- Inventory turnover days
- Accounts receivable turnover days
- Accounts payable turnover days
- Operating cycle (in days)
- Total asset turnover
Solutions
Expert Solution
Part 1 – Common Size balance sheet for 2010
|
Hershey: Consolidated Balance Sheets |
||
|
2010 |
Percent |
|
|
Assets |
||
|
Current Assets |
||
|
Cash and Equivalents |
884.60 |
20.70% |
|
Accounts Receivable, Trade |
390.10 |
9.13% |
|
Inventories |
533.60 |
12.49% |
|
Deferred Income Taxes |
55.80 |
1.31% |
|
Prepaid Expenses and Other Assets |
141.10 |
3.30% |
|
Total Current Assets |
2,005.20 |
46.93% |
|
Property, Plant, and Equipment, net |
1,437.70 |
33.65% |
|
Goodwill and Intangible Assets |
524.10 |
12.27% |
|
Other Intangible Assets |
123.10 |
2.88% |
|
Deferred Income Taxes and Other Assets |
182.60 |
4.27% |
|
Total Assets |
4,272.70 |
100.00% |
|
Liabilities and Shareholders’ Equity |
||
|
Current Liabilities |
||
|
Accounts Payable |
410.70 |
9.61% |
|
Accrued Liabilities and Taxes |
602.70 |
14.11% |
|
Short-Term Debt |
24.10 |
0.56% |
|
Current Portion of Long-Term Debt |
261.40 |
6.12% |
|
Total Current Liabilities |
1,298.90 |
30.40% |
|
Long-Term Debt |
1,541.80 |
36.08% |
|
Other Long-Term Liabilities |
494.40 |
11.57% |
|
Total Liabilities |
3,335.10 |
78.06% |
|
Shareholders’ Equity |
0.00% |
|
|
Common Stock |
359.90 |
8.42% |
|
Additional Paid-In Capital |
434.90 |
10.18% |
|
Retained Earnings |
4,374.70 |
102.39% |
|
Treasury Stock |
(4,052.10) |
-94.84% |
|
Accumulated Other Comprehensive Loss |
(215.10) |
-5.03% |
|
Noncontrolling Interests |
35.30 |
0.83% |
|
Total Shareholders’ Equity |
937.60 |
21.94% |
|
Total Liabilities and Shareholders’ Equity |
4,272.70 |
100.00% |
Rate of Change Balance Sheet for 2010
|
Hershey: Consolidated Balance Sheets |
||||
|
2009 |
2010 |
Increase
/ |
Percent Change |
|
|
Assets |
||||
|
Current Assets |
||||
|
Cash and Equivalents |
253.60 |
884.60 |
$631.00 |
248.82% |
|
Accounts Receivable, Trade |
410.40 |
390.10 |
($20.30) |
-4.95% |
|
Inventories |
519.70 |
533.60 |
$13.90 |
2.67% |
|
Deferred Income Taxes |
39.90 |
55.80 |
$15.90 |
39.85% |
|
Prepaid Expenses and Other Assets |
161.80 |
141.10 |
($20.70) |
-12.79% |
|
Total Current Assets |
1,385.40 |
2,005.20 |
$619.80 |
44.74% |
|
Property, Plant, and Equipment, net |
1,404.80 |
1,437.70 |
$32.90 |
2.34% |
|
Goodwill and Intangible Assets |
571.60 |
524.10 |
($47.50) |
-8.31% |
|
Other Intangible Assets |
125.50 |
123.10 |
($2.40) |
-1.91% |
|
Deferred Income Taxes and Other Assets |
187.70 |
182.60 |
($5.10) |
-2.72% |
|
Total Assets |
3,675.00 |
4,272.70 |
$597.70 |
16.26% |
|
Liabilities and Shareholders’ Equity |
||||
|
Current Liabilities |
||||
|
Accounts Payable |
287.90 |
410.70 |
$122.80 |
42.65% |
|
Accrued Liabilities and Taxes |
583.40 |
602.70 |
$19.30 |
3.31% |
|
Short-Term Debt |
24.10 |
24.10 |
$0.00 |
0.00% |
|
Current Portion of Long-Term Debt |
15.20 |
261.40 |
$246.20 |
1619.74% |
|
Total Current Liabilities |
910.60 |
1,298.90 |
$388.30 |
42.64% |
|
Long-Term Debt |
1,502.70 |
1,541.80 |
$39.10 |
2.60% |
|
Other Long-Term Liabilities |
501.40 |
494.40 |
($7.00) |
-1.40% |
|
Total Liabilities |
2,914.70 |
3,335.10 |
$420.40 |
14.42% |
|
Shareholders’ Equity |
||||
|
Common Stock |
359.90 |
359.90 |
$0.00 |
0.00% |
|
Additional Paid-In Capital |
394.70 |
434.90 |
$40.20 |
10.18% |
|
Retained Earnings |
4,148.30 |
4,374.70 |
$226.40 |
5.46% |
|
Treasury Stock |
(3,979.60) |
(4,052.10) |
($72.50) |
1.82% |
|
Accumulated Other Comprehensive Loss |
(202.90) |
(215.10) |
($12.20) |
6.01% |
|
Noncontrolling Interests |
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chocolates, candies, and confections. The company sells chocolates
and candies, mints and gums, baking ingredients, toppings, and
beverages. Hershey’s consolidated balance sheets for 2009 and 2010
follow:
Hershey: Consolidated Balance Sheets
(millions)
2009
2010
Assets
Current Assets
Cash and Equivalents
$ 253.6
$ 884.6
Accounts Receivable, Trade
410.4
390.1
Inventories
519.7
533.6
Deferred Income Taxes
39.9
55.8
Prepaid Expenses and Other Assets
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141.1
Total Current Assets
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2009
2010
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Current Assets
Cash and Equivalents
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$ 884.6
Accounts Receivable, Trade
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390.1
Inventories
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Deferred Income Taxes
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Prepaid Expenses and Other Assets
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$ 1,118.5
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477.9
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